1981 (11) TMI 184 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of the demand for property tax by the Special Area Development Authority.
2. Incorporation of Municipal Acts into the Act of 1973.
3. Procedure for imposing property tax.
4. Exemption from property tax for government-owned companies.
5. Conflict between State taxation and Union legislative powers.
6. Validity of the agreement waiving the power of taxation.

Analysis:

1. Legality of the Demand for Property Tax:
The primary issue was whether the Special Area Development Authority (SADA), Korba, had the authority to levy property tax on the appellant companies, Bharat Aluminium Company Ltd. and Western Coalfields Ltd. The companies argued against the legality of the property tax imposed by SADA.

2. Incorporation of Municipal Acts into the Act of 1973:
The appellants contended that SADA could only exercise the powers to levy property tax as they existed under the Madhya Pradesh Municipal Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, as of February 27, 1976. They argued that any subsequent amendments to these Acts could not be applied. The Court held that Section 69(d) of the Act of 1973 did not incorporate specific provisions of the earlier Acts but referred to the powers of taxation as they existed at the time of exercising those powers. Thus, amendments made to the Municipal Acts after the enactment of Section 69(d) were applicable.

3. Procedure for Imposing Property Tax:
The appellants argued that SADA did not follow the procedure prescribed by Sections 129 and 133 of the Municipalities Act and the Municipal Corporation Act, respectively. The Court found that Sections 127A and 135 of the respective Acts created the liability to pay property tax by their own force, and no further procedure was necessary. The property tax was not imposed under Sections 127 or 132, so the procedures in Sections 129 and 133 did not apply.

4. Exemption from Property Tax for Government-Owned Companies:
The appellants claimed exemption under Article 285(1) of the Constitution and Sections 127A(2) and 136 of the Municipal Acts, arguing that the companies were wholly owned by the Government of India. The Court held that although the companies were government-owned, they had a separate legal personality distinct from the government. Therefore, the properties vested in the companies could not be considered as owned by the Government of India for tax exemption purposes.

5. Conflict between State Taxation and Union Legislative Powers:
The appellants argued that the property tax impeded the objectives of the Coal Mines Nationalisation Act, 1973, and conflicted with the Union's power to regulate and develop mines. The Court found no evidence that the property tax constituted an impediment to the Act's goals. The Act of 1973 aimed at municipal administration and development of special areas, not at regulating mines and minerals, which fell under different legislative entries.

6. Validity of the Agreement Waiving the Power of Taxation:
The appellants contended that an agreement with SADA waived the authority's power to levy taxes. The Court endorsed the High Court's reasoning that the agreement was beyond the Chairman's authority and only related to the waiver of octroi tax, not all taxes. Therefore, the agreement did not preclude SADA from imposing property tax.

Conclusion:
The Supreme Court dismissed the appeals, upholding the authority of the Special Area Development Authority, Korba, to levy property tax on the appellant companies. The Court found that the amendments to the Municipal Acts applied, the procedure for imposing property tax was correctly followed, and the companies were not exempt from the tax. The agreement waiving the power of taxation was invalid beyond the waiver of octroi tax. The appeals were dismissed with costs.